Tuesday, July 10, 2007

REITs in Singapore

REITs (Real Estate Investment Trusts) can be a valuable addition to your investment portfolio if utilised properly. They provide steady, dependable capital gains and dividend payouts and generally have a much lower volatility than the average stock. They also tend to be resilient during economic downturns with smaller dips, and sometimes are able to resist the business cycle because investors know that property retains its value through economic recessions.

REITs also provide the liquidity of the stock market that owning property itself does not provide. In the event that you find yourself needing the money on short notice, or if you a great alternative investment vehicle, REIT stock can be liquidated quickly and safely without having to go through the hassle of an property agent. REITs also remove the need for constant monitoring that owning real estate requires, such as tending to difficult tenants and having to make repairs to the wear and tear of the property.

The only major drawback of REITs is that it does not provide the same upside that investing in other rapidly growing companies provides. Commercial and industrial property (which are mainly what REITs manage) tends to appreciate at a more moderate pace than technology stocks, for example. REITs also not typically the vehicle that speculators and 'flippers' of property what to invest in. But as mentioned, REITs do provide a protection from downside that risky startups do not, and they provide liquidity that real estate by itself lacks.

Singapore is striving to become a center for REITs; there are several REIT stocks listed on the Singapore Exchange. Here is a list of them:

  • AllcoReit
  • AscendasReit
  • AscottREIT
  • Cambridge Industrial Trust
  • Capital Commercial
  • Capitamall
  • First Reit
  • Fortune Reit
  • Fraser Commercial Reit
  • K-REIT
  • Macarthurcook Industrial REIT
  • Macquarie International Infrastructure Fund (not strictly a REIT but has similar characteristics)
  • Suntec REIT
As of writing there are also more REITs coming to the market. If you are thinking of a reliable investment that needs less tending to than other investments, do consider adding a few REITs to your portfolio. The list above provides a good place to start your search.

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